Flag and Pennant Patterns

Flag and pennant patterns are considered trend continuation formations. They usually develop during pullbacks after a directional price move. In most cases, these patterns are relatively small. However, during prolonged corrections, they can expand significantly in size.

Let’s take a closer look at what these patterns are and how they appear on price charts.

Contents:

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Flag Pattern

Flag pattern forms during a correction and looks like a channel or rectangle. A key feature is that a flag should be tilted against a trend or at least remain horizontal. Essentially, a flag is a small parallel channel formed within a trend.

The flag pattern in the downtrend.

The flag pattern

Pennant Pattern

Pennant pattern (also called a wedge) forms, like the flag, within a price movement or impulse and represents a correction of that movement. A pennant appears as a converging triangle.

The pennant pattern in the uptrend.

The pennant pattern

How to Trade Flag and Pennant Patterns

Since flag and pennant patterns are considered corrective formations within a primary price movement, they are usually traded in direction of a current trend. However, keep in mind that any correction can potentially turn into a trend reversal.

When trading the flag, the tactic is to enter a trade when the price breaks the flag’s boundary, in the direction of the trend.

How to trade the flag

For trading the pennant, the signal to enter a trade is the price breaking the pennant’s boundary.

How to trade the pennant

When trading these patterns, you don’t have to enter immediately at the breakout; you can wait for a pullback to the outer side of the pattern’s boundary before opening a trade.

Related Posts:
  1. ✅ Channels in Trading
  2. ⚡ Rectangle Pattern
  3. 📜 Triangle Pattern
  4. 💱 Diamond Pattern

Comments

Ponch
Ponch 2026-02-13 10:48:00 #
Flag and pennant patterns are very good. The key is not to mistake every channel for a flag or every converging triangle for a pennant. There must first be a trending movement, and only at its end should a flag or pennant form, which I trade as a correction. If the correction fails to confirm, I usually take 1-2 small stop-losses, the trend resumes, and I then wait for the next flag or pennant.
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